UniCredit (UCG) JP Morgan European Financials Conference 2024 summary

Strategic outlook and growth plans

• Transitioning from internal restructuring to a phase of sustainable quality growth, with a focus on efficiency, empowerment, and common processes, following 15 quarters of successive growth.

• Anticipates a challenging macroeconomic environment in 2025, with a projected 160 basis point drop in EURIBOR and flat lending volumes, but expects resilience in net profit and return on tangible equity.

• Central and Eastern Europe, contributing 30% of net profit, is expected to drive structural growth, outpacing Western Europe.

• Shifted client and product mix toward SMEs, private, affluent clients, and specialized lending, enhancing future growth and risk resilience.

• Plans include asset management expansion, insurance internalization, integration of recent acquisitions, and potential further M&A to accelerate growth.

Financial performance and outlook

• Aims to maintain a 17% return on tangible equity through 2025-2027, focusing on quality growth rather than volume at the expense of margins.

• Expects a moderate decline in net interest income in 2025, offset by growing fee income, especially from asset management and insurance integration.

• Cost control and risk management are prioritized, with costs expected to remain flat or decrease and cost of risk kept within 22-25 basis points.

• Net profit is targeted to remain above €9 billion in 2025 and exceed €10 billion in the mid-term, supported by front-loaded investments and improved revenue mix.

Capital distribution and shareholder returns

• Organic capital generation is projected to remain above net profit for 2025 and beyond, supporting high and consistent shareholder distributions.

• Dividend payout will increase to 50% from next year, with €6.5 billion of excess capital to be returned to shareholders by 2027, barring M&A.

• Total distributions are set to exceed 2024 levels in each of the next three years, with flexibility to modulate returns based on market conditions.

• CET1 ratio is expected to converge to around 13-13.2% after absorbing model adjustments.